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TeraWulf's Muskie expansion to 1 GW comes with $756m in security for Kentucky Power

Credited to Rackline · Claire Fontaine · investors.terawulf.com · 20h ago

TeraWulf's plan to double the power at its Muskie Data Campus in eastern Kentucky puts much of the risk of the expansion on TeraWulf rather than on the utility's other customers. Alongside the extra capacity, TeraWulf would provide about $756m of financial security to Kentucky Power and fund $100m in proposed winter bill credits for residential customers.

The amended agreements, signed Oct. 1 and announced Oct. 5, raise contracted power from 500 MW to 1 GW. The second 500 MW would arrive in 2029 instead of 2030, subject to approval by the Kentucky Public Service Commission and the utility's construction schedule. TeraWulf restated the expansion, with the same condition, in its Nov. 6 earnings release.

Payments continue if demand falls

Muskie's amended agreement doubles contracted power to 1 GW

Contracted utility power under Kentucky Power agreements; not energized load. Amendment needs state commission approval.

Table: Muskie contracted power rises from 500 MW to 1 GW; the second 500 MW phase moves to 2029 from 2030; phase terms are 20 and 15 years.
Item	Contracted power	Status or timing
Original agreement	500 MW	Contracted utility power before amendment
Amended agreement	1 GW if Kentucky Public Service Commission approves	Signed Oct. 1; subject to Kentucky Public Service Commission approval; original 500 MW stays in force until then
Second 500 MW phase	500 MW of the 1 GW	Target 2029 from 2030 if Kentucky Public Service Commission approves and utility builds
Phase one term	First 500 MW	20-year term (contracted)
Phase two term	Second 500 MW	15-year term (contracted)

Source: TeraWulf Oct. 5, 2026 release; Kentucky Power Muskie fact sheet Oct. 2026; Rackline cutUtility contracted power only, not energized or completed data-hall load. Second-phase 2029 timing and the amendment remain subject to Kentucky Public Service Commission approval and utility construction. Evaluated campus upside beyond 1 GW excluded. No Rackline arithmetic.

According to Kentucky Power's October fact sheet, TeraWulf must pay monthly charges based on at least 90% of its committed capacity even if it uses less. Phase one keeps its 20-year term and phase two has a 15-year term. The campus cannot cut its contracted capacity or exit during the first ten years.

Once the full commitment takes effect, the fact sheet estimates minimum payments of about $250m a year at today's rates, even if the campus uses no electricity. That floor makes the utility less dependent on how fast Muskie fills up. If TeraWulf's tenants ramp slowly, it still owes the bill.

The $756m security is separate from those payments, from the residential credits and from the Big Sandy charges described below. Kentucky Power can draw on the guarantees if TeraWulf fails to meet its obligations. The fact sheet does not say the full amount has been posted in cash.

TeraWulf would fund the residential credits at $10m a year for ten years, applied to January through March bills starting in 2029, if the commission approves. The fact sheet says wider effects on customer rates depend on utility costs, consumption and regulatory decisions, so the agreement promises no broader rate cut.

Big Sandy adds a separate obligation

TeraWulf would also pay the financing costs during construction of Kentucky Power's planned 760 MW combined-cycle plant at Big Sandy, until the plant enters service. That obligation depends on the commission approving both the special contract and the plant. It does not make TeraWulf responsible for the plant's full construction cost.

Until Big Sandy runs, Muskie would pay the actual market cost of its electricity instead of the standard fuel charge, plus a $17,000 monthly administrative fee. Those market costs would not flow into other customers' fuel charges. Muskie would draw power from the regional grid, not only from Big Sandy.

These protections address a different risk from Google's backing of Anthropic's lease at TeraWulf's Hawesville site, which supports tenant credit at the separate Justified campus. The Muskie package protects the utility and its existing customers.

The approval process is at an early stage. In an Oct. 30 filing in case 2026-00323, Kentucky Power said it intends to apply by Dec. 31. As of Nov. 6, the docket lists that notice, the commission's acknowledgment and the attorney general's motion to intervene, with no application or order. The fact sheet says the original agreement stays in force until approval.

Paying for these utility commitments is a separate problem from paying to build data halls. TeraWulf's Nov. 6 release says its revolving credit commitments rose to $400m from $250m after the quarter ended. Its Oct. 5 filing cited company-wide needs for utility letters of credit as one reason to seek more secured debt. It did not announce committed financing for Muskie or say that more financing would be obtained.

This story was updated to fix the formatting of a reference to Google's backing of Anthropic's Hawesville lease.